The three major indexes have taken investors through the ups and downs of investing over the past few years, reaching bearish territory in 2022 before rising by double digits last year. While it's impossible to predict with 100% certainty what the market will do this year, there are reasons to be optimistic about what lies ahead. That's because history shows that bear markets always lead to market booms, and that boom periods, or bull markets, last longer than downturns.
Either way, there are types of stocks that can bring you big profits regardless of market trends. I'm talking about dividend stocks, where you can earn passive income every year just by owning the stock. In bull markets, you can often benefit from the market performance and extra income of these stocks, and in more difficult times, their dividend payments alone can strengthen your portfolio. Here are the top five dividend stocks to buy in 2024.
1. Johnson & Johnson
johnson & johnson (NYSE:JNJ)as dividend king, has raised payments for more than 50 consecutive years. This track record shows that rewarding shareholders is important to the company, so it's reasonable to expect this policy to continue.
J&J pays a dividend of $4.76 per share, yielding 2.95%, which is higher than the S&P 500 dividend. free cash flowhas what it takes to financially support dividend increases.
Importantly, further growth for this company could be just around the corner. Last year, J&J spun off its consumer health business, where growth had slowed, to focus on its faster-growing pharmaceutical and medical technology businesses. The company expects to launch 20 new drugs and 50 extensions of current products by 2030. And by 2027, one-third of medical technology sales will come from new products. So buying J&J stock now would provide a nice combination of safety — thank you. Toward dividends and growth.
2. Coca Cola
coca cola (NYSE:KO) It has also earned a spot on the list of Dividend Kings after decades of dividend growth. The company pays a dividend of $1.84 per share and yields 3.06%, similar to J&J and higher than the S&P 500.
The world's largest non-alcoholic beverage maker's cash payout ratio indicates that it pays out 76% of its free cash flow as dividends. And the company's growing free cash flow shows that this is clearly sustainable.
Driving this cash flow growth is Coca-Cola's high-quality business, which sells its namesake beverages and many other top brands, from Dasani Water to Minute Maid juices. and maintain repeat customers. Coca-Cola's strong moat, or competitive advantage, is this brand strength that has allowed the company to continue to grow profits even as high inflation weighed on consumers' purchasing power last year. .
Therefore, Coca-Cola can grow its profits and dividends over time almost regardless of the economic environment, making it a great stock to buy and hold over the long term.
3. Abbott Laboratories
like Abbott Laboratories (NYSE:ABT) The company's long history of dividend growth, its encounter with a new dividend king, and its diversified healthcare business have been highly evaluated.
First, let's talk about dividends. Abbott has a yield of 1.93% and is paying a dividend of $2.20 per share, which is higher than the S&P 500 yield. Also, like the companies mentioned above, Abbott has solid free cash flow to support dividend growth. So if you buy this stock, you can imagine your passive income increasing year after year.
As for Abbott's business, it is comprised of four segments: Medical Devices, Diagnostics, Nutrition and Established Pharmaceuticals. The appeal of this is that even if one person faces certain headwinds, others can pick up the slack. Just as the company's coronavirus testing revenue went from rising to declining, the same thing happened with diagnostics. In the most recent quarter, excluding the negative impact from coronavirus testing, Abbott's sales rose more than 13% to his $10 billion, and all four businesses posted double-digit profits for him. .
So, using Abbott's past track record as a guide, you can expect steady revenue growth with more passive income year after year.
4. AbbVie
AbbVie (New York Stock Exchange: ABBV) It debuted in 2013 when Abbott spun off its pharmaceutical business, and since then the new company has increased its dividend by 285%. Currently, AbbVie is paying him a $6.20 dividend per share at a yield of 3.80%.
AbbVie said in its recent earnings call that increasing its dividend remains a priority even as the company enters an important transition period. AbbVie's best-selling drug, Humira, faces competition from biosimilars that equates to a decline in revenue. But the company has developed two new immunotherapy drugs, Rinvoke and Skyridi, and aims to take over and collectively exceed Humira's peak revenues by the end of this decade.
Rinvoq and Skyrizi are on the right track as they aim for full-year 2023 sales of $11.6 billion. In addition to this, AbbVie also has a full portfolio of other leading medicines in areas such as neuroscience and beauty, as well as a promising pipeline.
All of this means that stock price growth and dividends are likely to increase as AbbVie approaches its goals.
5. Medtronic
medtronic (New York Stock Exchange: MDT) is also a company in a transition stage that will lead to further growth. The medical device giant is taking steps to improve efficiency, divest low-growth businesses and invest in growth areas such as artificial intelligence (AI).
At the same time, Medtronic has committed to making dividend growth a priority. In its latest earnings report, the company said it aims to return at least 50% of its free cash flow to shareholders each year. In fiscal 2023, it returned $4 billion, or 86% of its free cash flow, in the form of dividends and share buybacks.
Medtronic pays a dividend of 2.76 times with a dividend yield of 3.20% and has been increasing its dividend for over 45 years. The company's prioritization of dividend growth, its commitment to earnings growth, and the fact that it's very close to being named Dividend King make this the best dividend stock to buy this year.
Should I invest $1,000 in Johnson & Johnson right now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool owns a position in and recommends Abbott Laboratories. The Motley Fool recommends Johnson & Johnson and Medtronic and recommends the following options: Long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has Disclosure policy.
Top 5 High Dividend Stocks to Buy in 2024 Originally published by The Motley Fool
